DoD, GSA, and NASA published a definition of “recruitment fees” for purposes of FAR 52.222-50 in today’s Federal Register.  As we have previously discussed, the anti-trafficking requirements in FAR 52.222-50 were amended almost a year and a half ago to prohibit contractors from charging employees recruitment fees, without defining such fees.  Subsequent efforts to define the term have included (1) the House’s passage of the Trafficking Prevention in Foreign Affairs Contracting Act (H.R. 400), which would require USAID to propose a definition of recruitment fees, and (2) the Defense Acquisition Regulations Council and the Civilian Agency Acquisition Council’s (the “Councils”) release of a proposed definition and request for public input.

The definition published today differs only slightly from the Councils’ previously proposed definition. It provides that “recruitment fees include, but are not limited to, fees, charges, costs, assessments, or other financial obligations assessed against employees or potential employees, associated with the recruiting process” for:

  • Soliciting, identifying, interviewing, transferring, or training employees or potential employees;
  • Covering the cost of advertising;
  • Processing petitions;
  • Visas, including appointment and application fees;
  • Government-mandated costs, including border crossing fees;
  • Procuring photographs and identity documentation;
  • Facilitating a condition of access to the job opportunity, such as medical examinations, immunizations, security clearance checks;
  • Compensating an employer’s recruiters, agents or attorneys; or
  • Hiring language interpreters or translators.

Additionally, a fee qualifies as a recruitment fee regardless of whether it is collected by the employer or a third party, including (but not limited to) agents, recruiters, and subcontractors.

DoD, GSA, and NASA will accept comments regarding the proposed definition through July 11, 2016. The agencies are seeking input regarding the following particularly noteworthy topics:

  • Whether all costs associated with onboarding an employee should qualify as recruitment fees;
  • Whether the definition of recruitment fees should vary based on whether the position at issue is “a professional high-paying, high-skill job or an unskilled low-paying job”;
  • Whether the location of a job should be a factor in the definition recruitment fees; and
  • Whether the proposed definition includes sufficient “boundaries (i.e., limitations).”

Given the breadth of the proposed definition, it could have a significant impact on contractors’ recruiting practices. Indeed, contractors could be liable for a host of fees collected by third parties, even if such fees are not collected at the direction of the contractor.  Consider, for example, a potential employee that pays a third-party training service to secure training to become a more competitive applicant prior to contacting a potential employer.  Under the proposed definition, this arrangement could qualify as a “recruitment fee,” as a third party would have collected a fee in exchange for training in connection with the recruitment process.  As a result, a contractor who subsequently hires the employee could be liable, even though it had no involvement with the arrangement between the third-party and the employee.

Therefore, contractors would be well advised to evaluate the potential impact of this proposed definition and consider submitting comments to the extent that the seemingly broad definition may encompass activity beyond that which is necessary to prevent human trafficking.

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Photo of Jennifer Plitsch Jennifer Plitsch

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She…

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She has particular expertise in advising clients on intellectual property and data rights issues under the Federal Acquisition Regulations (FAR) and obligations imposed by the Bayh-Dole Act, including march-in and substantial domestic manufacturing. Jen also has significant experience in negotiation and compliance under non-traditional government agreements including Other Transaction Authority agreements (OTAs), Cooperative Research and Development Agreements (CRADAs), Cooperative Agreements, Grants, and Small Business Innovation Research agreements.

For over 20 years, Jen’s practice has focused on advising clients in the pharmaceutical, biologics and medical device industry on all aspects of both commercial and non-commercial agreements with various government agencies including:

  • the Department of Veterans Affairs (VA);
  • the Department of Health and Human Services (HHS), including the Biomedical Advanced Research and Development Authority (BARDA), the National Institutes of Health (NIH), and the Centers for Disease Control (CDC);
  • the Department of Defense (DoD), including the Defense Threat Reduction Agency (DTRA), the Defense Advanced Research Projects Agency (DARPA), and the Joint Program Executive Office for Chemical Biological Defense (JPEO-CBRN); and
  • the U.S. Agency for International Development (USAID).

She regularly advises on the development, production, and supply to the government of vaccines and other medical countermeasures addressing threats such as COVID-19, Ebola, Zika, MERS-CoV, Smallpox, seasonal and pandemic influenza, tropical diseases, botulinum toxin, nerve agents, and radiation events. In addition, for commercial drugs, biologics, and medical devices, Jen advises on Federal Supply Schedule contracts, including the complex pricing requirements imposed on products under the Veterans Health Care Act, as well as on the obligations imposed by participation in the 340B Drug Pricing program.

Jen also has significant experience in domestic sourcing compliance under the Buy American Act (BAA) and the Trade Agreements Act (TAA), including regulatory analysis and comments, certifications, investigations, and disclosures (including under the Acetris decision and Biden Administration Executive Orders). She also advises on prevailing wage requirements, including those imposed through the Davis-Bacon Act and the Service Contract Labor Standards.